Qantas, Air New Zealand Seek to Reassure

Published 7:00 pm, Thursday, January 23, 2003

Qantas and Air New Zealand pledged Friday not to use their proposed alliance to prevent other carriers flying between Australia and New Zealand.

The carriers are seeking to convince consumer watchdogs in both countries that their plans will not stifle competition.

Qantas is proposing to pay 511 million Australian dollars ($301 million) for a 22.5 percent stake in Air New Zealand.

The Australian Competition and Consumer Commission and the New Zealand Commerce Commission have the power to block the proposal, which critics argue would give the airlines a monopoly on routes over the Tasman Sea that separates Australia and New Zealand.

In documents submitted to the watchdogs Friday, the airlines said they would offer more direct routes for travelers and strive to boost tourist numbers to the region through increased advertising of their vacation packages if they are allowed to join forces.

The Qantas-Air New Zealand filings also included a pledge to ensure any new carrier operating on trans-Tasman routes had the necessary access to terminals, ground services and engineering facilities.

The proposed partners also said they would not take "unreasonable actions" relating to capacity and prices _ an apparent allusion to raising ticket prices _ on routes where they faced no competition.

But Australian domestic carrier and Qantas competitor Virgin Blue, which also wants to begin flying to New Zealand cities, said Qantas and Air New Zealand's pledges were worthless.

Virgin Blue operations chief David Huttner said he was "amazingly underwhelmed by what appears to be a Qantas and Air New Zealand fantasy scenario."

Struggling Air New Zealand, which is majority owned by the country's government, has warned that it will have difficulty surviving if the alliance with Qantas is rejected.